Rivian stock opened 10% down on Thursday: here’s why

Rivian Automotive Inc (NASDAQ: RIVN) opened down 10% on Thursday after revealing plans of issuing convertible notes.

Convertible bonds tend to be dilutive

The electric vehicles company intends to offer $1.5 billion worth of green convertible senior notes “subject to market and other conditions” due at the end of this decade.

Buyers will also have the option to purchase another $225 million of convertible debt, as per the press release. Investors tend to see such bonds as negative since they are dilutive when they convert into shares.

Earlier this week, the Nasdaq-listed firm said it delivered 15,564 vehicles in the third quarter – up 23% on a year-over-year basis and beating consensus by more than 1,500 units as Invezz reported here.

Despite the sell-off today, Rivian stock is still up more than 75% versus its year-to-date low.

Why else is Rivian stock down today?

Rivian stock is down also because shareholders had perhaps expected more in terms of preliminary sales estimates that it announced this morning.

The EV firm is calling for $1.29 billion to $1.33 billion in sales in the third quarter – roughly in line with the FactSet consensus at $1.31 billion.

Rivian ended September with about $9.1 billion worth of cash, equivalents, and short-term investments, as per the press release on Thursday.  

The Irvine-headquartered company has recently reiterated that it remains committed to producing 52,000 vehicles in total in 2023. Wall Street currently has a consensus “overweight” rating on shares of Rivian Automotive Inc.